What is watchoveru expected net interest income


Problem: Consider the following income statement for WatchoverU Savings Inc. (in millions):

Assets

 

Liabilities

 

Floating-rate (currently 10% annually

$50

NOW accounts (currently 6% annually)

$70

30-year fixed-rate loans (currently 7% annually)

50

Time deposits (currently 6% annually)

20

 

 

Equity

10

Total

$100

 

$100


Q1. What is WatchoverU's expected net interest income at year-end?

Q2. What will be the net interest income at year-end if interest rates rise by 2 percent?

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